Morning commodities commentary

CBS.MarketWatch.com

05/10/00 am: Choice cutouts closed 40-51 cents higher last night; selects, down 28-46 cents. Sales were light. Tuesday slaughter was posted at 129,000 vs. 126,000. The shortage of choice beef/abundance of select cuts, is likely causing packers to limit slaughter. While estimated packer margin looks exceptionally favorable, packers are not increasing slaughter as might be expected. In addition, estimated margin is probably overstated. Packers sold a large volume of beef ahead in March-April at lower than current prices. Sltr Est: 131,000

DAILY FED CATTLE OUTLOOK

05/10/00 am: Cash trade is expected today, but sales may be light. It will likely be afternoon if sales occur. If packers want/need to buy today, bids will need to increase to steady/higher than last week. If packers wait until tomorrow, steady/lower will likely buy all they want. Higher beef prices past couple days, at least on choice, will encourage cattle feeders to hold out for higher prices today. Packers are probably getting short due to modest purchase volume last week. Cornbelt: 71-73/115-117 Kansas: 71-73 Texas: 71-73

DAILY FEEDER CATTLE OUTLOOK

05/10/00 am: Prices today for replacement feeder cattle will range from steady to fully 1 dollar higher. Feedlot buyers will be encouraged to be aggressive for replacements due to lower corn prices again this week. Receipts will continue moderate to light, as is seasonally normal. Selling interest is good but grazing conditions are generally favorable, so no need to advance the selling schedule. April placements are estimated down 4-5 percent for April. Plains: 82-92 Cornbelt: 84-94

DAILY HOGS/PORK OUTLOOK

05/10/00 am: Cash hog prices this morning are expected steady to 1 dollar lower. Pork cutout closed down 74 cents last night and packers should be starting with ample inventory. Hog movement today is expected to be moderate. Estimated packer margin remains bad. Slaughter is down 13,000 from week ago for first two days. Pork demand will be fair to good today for hams at steady, bellies and butts weak/lower and steady/higher on loins. Sltr Est: 360,000 Friday: WI Carc: 56-74 WT: 50-50.50 EI Carc: 58-71 ET: 48.50-49.25

GRAIN:

DAILY CORN OUTLOOK

05/10/00 am: July corn futures closing call: up 1 cent today. USDA normally uses trend yields for their first projections of the crop until the actual field surveys begin in August. At the Outlook Conference, USDA used a 135.5 yield, which would equate to a 9,700 million bushel crop.Some expect USDA could project a 9,738 to 9,881 crop. Early planting is one factor, but dryness and warmth is the reason early planting was possible.South Korea bought 82,500 tonnes of U.S. no. 2 corn for food processing.At the same time, a South Korean feed association delayed 210,000 tonnes of corn, probably Chinese, for 10-15 days in September. Markets have been expecting delays since the outbreak of hoof and mouth disease, which has not even been confirmed in hogs.Dreyfus and ADM stopped the corn deliveries.

DAILY SOYBEANS OUTLOOK

05/10/00 am: July beans closing call: up 3 cents today. If USDA uses the same yield they used at the outlook conference, Friday's crop projection would be 2,936. Last year, they projected a 2,880 crop in May and carryover at 595 million bushels. Most recent estimates are a 2,643 crop and a 305 carryover. The key to beans remains Chinese demand, which is growing rapidly. They will be buyers on breaks. Dreyfus and ADM were stoppers of soybeans, and ADM continues to stop oil.Malaysian palm oil fell to a two-month low on ideas that exports will slow. Cash was down to 14.1 cents f.o.b.India increased import duties on refined edible oils from 16.5 percent to 27.5 percent in December. Now they are considering a 50 to 60 percent import duty.If the monsoon is poor again, they will have to import more.

DAILY WHEAT OUTLOOK

05/10/00 am: Chicago July wheat futures closing call: up 2 cents today. Kansas City July futures closing up 2 cents today. U.S. wheat acres are down and ratings are below last year, so the crop should be smaller. We expect 2,187 million bushels vs. 2,302 million last year. Unless something dramatic happens to prices, look for hard winter acres to be down again for 2001. Spring wheat acres will decline again next Spring as well.Ideas for winter production will be 1,550 to 1,650 million bushels vs. 1,700 last year.World numbers will be interesting as world demand continues to climb to record levels.South Korea bought 20,800 tonnes of U.S. wheat overnight. Sri Lanka tenders May 31 for 100,000 tonnes of wheat.Commercials stopped 124 out of the 281 lots of wheat delivered in Chicago.

DAILY COTTON OUTLOOK

05/10/00 am: July futures: up 25 today. Cotton outlook has projected the U.S. crop at 19.54 million bales, while the ICAC has projected 19.29 million bales. Based on acres, USDA should project 18.75 to 19 million bales on Friday.Export sales and shipments will impact trade early Thursday.The outlook remains dry in the U.S. Cottonbelt as well as India/Pakistan, so U.S. or world yields are far from certain.With Australia in the A Index, ideas are that it will be more volatile as Australia follows the futures like the U.S. does.

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